Teck Resources Ltd. says it has completed the sale of its remaining 77 per cent interest in its steel-making coal business to Glencore PLC.
The news comes as no surprise following the announcement last week by the federal government that it had approved the sale of the operation to the Swiss commodities giant.
Vancouver-based Teck received $7.3 billion US from Glencore for its coal business, which it sought to offload in order to focus more on critical minerals and the energy transition.
Glencore had initially pursued a $25-billion hostile takeover attempt for all of Teck, a move that sparked economic nationalism concerns in Canada.
Industry Minister François-Philippe Champagne said last week the green light for the sale of Teck’s coal business comes with “strict” conditions and represents a “much narrower” transaction than Glencore’s hostile takeover attempt last year.
Teck previously closed the sale of a minority stake in the steel-making coal business to Japan’s Nippon Steel Corp. and South Korea’s Posco.
“This transaction marks a new era for Teck as a company focused entirely on providing metals that are essential to global development and the energy transition,” said the company’s president and CEO Jonathan Price in a statement last week.
“Completion of this transaction will provide substantial funding for our projects, giving Teck a pathway to increase copper production by a further 30 per cent as early as 2028.”
Teck plans to use up to $2.75 billion of the proceeds for share buybacks, $2.75 billion for debt reduction, $250 million for a special dividend, $1 billion for taxes and transaction-related costs, and the rest toward its copper growth plan.
The company has four near-term copper projects that it estimates would together cost about $4.7 billion to complete, while it’s also working to ramp up production at its roughly $8.7 billion US Quebrada Blanca Phase 2 project in Chile.
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Champagne said approval of the deal comes as the energy sector rapidly evolves to become more sustainable.
“As a result of the Glencore and Teck transaction, we are supporting a Canadian champion to lead the transition from coal to critical minerals.”
As part of the deal, Champagne said Glencore has committed to establishing and maintaining a Vancouver head office for Elk Valley Resources for at least 10 years, along with regional offices in Calgary and Sparwood, B.C.
The conditions also include ensuring the majority of Elk Valley Resources’ directors, and two-thirds of its executives or senior managers, are Canadian for the same duration.
Ottawa said Glencore has also agreed to “maintain significant employment levels” at Elk Valley Resources for at least five years.
“We have made significant commitments to the Canadian government aimed at ensuring the transaction is of lasting benefit to Canada and British Columbia,” said Glencore chief executive Gary Nagle in a statement.
Glencore’s $25-billion hostile takeover attempt had “raised very serious concerns and was rejected by shareholders,” Champagne said.
The approved steel-making coal deal, originally announced last November, represented the best possible outcome after nearly a year of battling over the future of the company, Price said at the time.
The announced deal also included Japanese company Nippon Steel Corp. acquiring a 20 per cent stake in exchange for its interest in one of Teck’s coal operations and $1.7 billion US in cash, while South Korean steel-maker Posco would swap its interest in a pair of Teck’s coal operations for a three per cent stake in the overall steel-making coal operations.
News first broke in 2021 that Teck was exploring a sale of its coal division, launching speculation about buyers and concerns about another big foreign takeover of Canadian mining assets.